Technology has emerged as a crucial part of the business of Bank of Baroda and with technology, the bank now aspires to focus on its customers. With the creation of a strong technology platform, the business decision making can be boosted as a result of better supervision and formation of rich management information system (MIS).
Akhil Handa, Head of Fintech & Partnerships, Bank of Baroda, explains the reason why blockchain technology has been adopted in the bank as well as the BFSI sector in general.
When asked whether the blockchain technology worth investing in the banking sector, Akhil Handa said, it is worth investing in the banking sector. It may have remained to disrupt in healthcare, retail, and energy sector. The many appealing features of blockchain technology such as immutability, decentralization, and transparency have made it attractive for the business sectors and various domains all over the world. Banks and finance sector are exploring the massive potential of blockchain all across the industry.
When asked how blockchain may disrupt banking, Akhil Handa said, blockchain technology gives way to untrusted third parties to agree on the state of a shared database. It eliminates the requirement of any middleman. By offering a ledger that no one manages, a blockchain can effectively offer particular financial services such a remittance, securitization, payments without involving a middleman just like a bank.
Blockchain possesses the capacity of tackling the trade-offs of data partitioning and aims to maintain both consistency and availability with the help of various consensus protocols. Blockchains can allow the use of smart contracts which can significantly automate the manual processes right from compliance and claims processing to distribution of the contents of a will. Distributed Ledger Technology popularly known as DLT can assist corporate build strong governance and standards around data sharing and collaboration. Presently, global banking has become a $ 134 trillion industry. The blockchain technology and DLT may dis-intermediate crucial services that banks offer which may include trade finance, payments, fundraising, securities, loans, and credit, etc.
When asked the various challenges faced by Bank of Baroda in implementing blockchain and its benefits, Akhil Handa said that the bank is working on a few use cases specifically for trade finance, e-KYC, and invoice discounting. Blockchain is an attractive technology with various unique features. The technology is in the initial phases of development. Fast development is also on its way around various blockchain platforms to make them steadier.
Akhil Handa also highlighted the significance of blockchain in the banking sector in the coming years. He said blockchain is the latest technology and it may take some time for this technology to get completely functional in the banking and financial services sectors. In order to explore the benefits of blockchain technology, banks all over the world are taking up pilot projects around various financial use cases.